Little Joe,
What you say is true in a long-term sense. I mean, shorting a bull market is stupid. But on a weekly-cycle basis, there are points where extremes are reached, and it is time for traders to sell part of the position. I agree price action is the most important determinant of extremes in the market, but for a number of years now, extreme levels of commercial shorts have also been one of the tools that have helped in determining extremes.
Price action tells me gold and gold stocks are going higher in the coming months, but for the next few weeks, I'm less optimistic on the stocks. On the metal, maybe we tread water between 350-365 for a few more weeks, which is bad with all the expectation of an imminent break higher (IMO).
Commercial short levels on the metal are one indicator. Trend indicators on NEM are starting to look poor, and late next week I expect it to start leading the stocks down. Third, there is a potential boo-boo in general equities coming, where baby gold stocks get thrown out with the bath water. Lastly, the seasonal is starting to work against us:
spectrumcommodities.com
Regards,
crusty |
